Debt instruments at FVOCI and recycling

Learning objectives

• Record a debt instrument at FVOCI: interest, impairment and foreign exchange gains and losses in profit or loss, other changes in fair value in OCI, reclassification on derecognition.L2, L3
• Calculate, from the data of a case, the amounts relating to debt instruments at FVOCI and their reclassification.L2, L3

Normative references

• IFRS 9 §5.5.2For a debt instrument at FVOCI, the loss allowance is recognised in other comprehensive income and does not reduce the carrying amount of the asset (which remains at fair value), and the impairment loss is recognised in profit or loss.
• IFRS 9 §5.7.10For a debt instrument at FVOCI: interest (effective interest rate), credit losses and foreign exchange gains and losses (calculated on the amortised cost) are recognised in profit or loss, other changes in fair value in OCI; on derecognition, the cumulative amount in OCI is reclassified to profit or loss (as a reclassification adjustment); the effect on profit or loss is therefore the same as under amortised cost.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• For a debt security measured at FVOCI, which component is recognised in other comprehensive income?L2
• Delta SA holds a debt security measured at FVOCI. At 31 December, its fair value is {fair_value_closing} and its amortised cost is {amortised_cost_closing}. Calculate the cumulative amount to present in OCI (before any loss allowance).L2
• Delta SA sells the debt security it measured at FVOCI. The cumulative gain in OCI at the date of sale is {cumulative_oci}. Record the entry recycling the cumulative amount to profit or loss (excluding the sale entry itself).L3